DETERMINANTS AND OUTCOME OF CUSTOMER SATISFACTION AT COMMERCIAL BANK OF ETHIOPIA: EVIDENCE FROM ADDIS ABABA

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1 DETERMINANTS AND OUTCOME OF CUSTOMER SATISFACTION AT COMMERCIAL BANK OF ETHIOPIA: EVIDENCE FROM ADDIS ABABA Teshale Shode Kebede Lecturer of Marketing Management Dean - College of Business and Economics, Hawassa University, Ethiopia. ABSTRACT This study was conducted on Determinants and outcome of customer satisfaction at Commercial Bank of Ethiopia by taking evidence from Addis Ababa which is capital city of Ethiopia. Seven branches were selected randomly. The overall objective of the paper was to investigate major factors that Influence customer satisfaction and to examine resulting effect on customer future behavioral intension. To achieve stated objective five point liker-scale questionnaires were developed and distributed to 210 customers in convenience sampling base. Among them 178 questionnaires were responded representing 84 percent of the response rates. The data were feed to version16.00 SPSS computer program and analyzed accordingly. Correlation and regression were used to examine statistical significance of the relationship between the variables. Services quality, services features, and customer complaint handling system were found as major determinants of customer satisfaction in commercial bank of Ethiopia. Statistically highly significant and positive relationships were found between the aforementioned three factors and customer satisfaction. Positive and significant relationship was examined between customer satisfaction and future behavioral intension with the organization. Current performance of the organization with regard to services quality, services features, and customer complaint handling is contributing moderately towards customer satisfaction Key words: Service Quality, service Features, Complain Handling, customer satisfaction, customer loyalty. Introduction to the study This study was conducted on the Determinants and outcome of customer satisfaction with reference to the commercial bank in Addis Ababa, Ethiopia. It was aimed to identify major determinants of customer satisfaction which in turn may affect future intension of the customers in using bank services. In the current business environment, banking jobs are becoming more and more lucrative and many people are joining the industry (Asiedu, 2015). This has made the industry to be highly competitive and as a matter of fact, satisfying customers and gaining their loyalty determine the long run fate of the business. This requires the employment of the effective competitive strategies to remain in the industry. One of the most commonly used strategy by business firms is product differentiation. But this strategy is not viable to the banking sector, since the products offered are more or less standardized in nature and easily imitated by the competitors. So banks are feeling on increasing need to differentiate themselves from the competitors by other criteria that can influence customers satisfaction and loyalty (Gerpott et al., 2001). Customer satisfaction is an evaluation by the customer after buying their goods and services (Oliver, 1981).Schiffman, 2005 has defined customer satisfaction as individuals perception of the performance of the product or service in relation to his/her expectations. Satisfaction is the customers evaluation of a product or service in terms of whether that product or service has met their needs and expectations (Olive, 1997).According to the disconfirmations model, satisfaction is the consumers response of perceived discrepancy between prior expectations and the actual performance of the product as perceived after its consumption (Tse and Wilton, 206

2 1988). Schiffman (2005) had also defined satisfaction as a person s expression of pleasure or disappointment resulting from comparing a service outcome in relation to the expectations. In an era of mature and intense competitive pressures such as the increased competition, the need for innovation, the need to improve quality of products and services, and availability of new and effective information management tools, many firms are increasingly investing in technology and humans with the aim of leveraging intellectual assets (Asiedu, 2015) to maintaining a loyal customer base. This is particularly true in financial services sectors where deregulation has created an environment that allows customers considerable choice in satisfying their financial needs. Satisfied customers are loyal to the organization and retained for longer period of time. In the words of Asiedu (2016)A Bank s performance determines how loyal its customers are and it is normally measured in percentage of long term customers. Reich held and Sasser (1990) has recognized the benefits that customer retention delivers to a bank. According to Asiedu (2016), customer satisfaction is very important because satisfied customers retained for longer and tend to lower cost, make vulnerable reference to new potential customers to increase banks market-share and spend more. For instance, the longer customer stays with a bank the more utility the customer generates. This is the result of a number of factors relating to the time the customer spends with a bank. To meet the dynamic preferences of the customers and to stay ahead of competitors, bankers are bound to deliver quality and efficient services, improve their services features and deal with customers complaints effectively. Bankers can enhance customers service by leveraging on technology, maintaining efficient service delivery standards and business process re- engineering. Despite this fact, customers dissatisfaction remained features of banking sector accompanied by increasing number of complaints (Knights,.and McCabe, 1996). Therefore, it was on the bases of the above background that this study was aimed to assess the satisfaction in commercial bank of the Ethiopia (CBE) with special reference to Addis Ababa. factors that determine customers Statement of the problem In the banking sector where attaining customers satisfaction through product differentiation gives only temporary competitive advantage due to the standardized nature of the products; knowing major factors that strengthen customer base through sustainably satisfying them determines long term organizational performance. Despite this fact, reports of banking ombudsmen has shown that increasing number of complaints resulting from services failure which in turn emanated from lack of enough knowledge concerning the factors that determines customers satisfaction (Wilinkson, A.et al., 1995). Failures on the part of the bank and reluctance of customers to participate in banking relationship because of less switching cost cultivate ground for problems ((Ombat et al., 2010). Schmenner (1986) classified the retail banking industry as a mass service. Mass service industries have a low degree of variation in customer interaction/customization. Mass service firms face several challenges including the problem of making their services warm responsive (responsiveness dimension of SERVIQUAL), attracting and retaining customers through innovative marketing practices (retention and relationship dimension), and paying attention to physical surrounding (tangibility dimension of the SERVIQUAL). These firms are also faced with managing a fairly inflexible work force and work procedure hierarchy with the need for standard operating procedures that ensures correct and reliable service delivery( reliability and knowledge dimensions of the SERVIQUAL) (Schemenner,2004 ) As far as services provided by commercial bank of Ethiopia (CBE) are concerned in line with the above view; despite its effort to increase customer base and their loyalty it is facing stiff competition from private banks. Because of this customers have got wider varieties of banking service choices. So they have been being highly demanding and current performance of the bank under investigation is yet to bring about customer satisfaction in required level. That is why almost half of customers are dissatisfied by services provided by services sectors in Ethiopia including banking industry ( Potluri and Mangnale, 2011). Dissatisfied customers are in turn less loyal and switchers (Zeithaml and Bitner, 2003). Therefore, it was on the bases of this back ground, this study were aimed to examine major determinants of customer satisfaction in the commercial bank of the Ethiopia by answering the following research questions. What are the major determinants of customer satisfaction in commercial bank of Ethiopia? Is service quality affects customers satisfaction in commercial bank of the Ethiopia? What is the role of services feature on customers satisfaction in commercial bank of Ethiopia? What is the effect of customer complain handling system on customer satisfaction in Commercial bank of Ethiopia? What is the relationship between customer satisfaction and loyalty in commercial bank of the Ethiopia? What suggestions can be made to improve the current situation? 207

3 Objectives of the Study The overall objective of this was to identify the major determinants of customer satisfaction in the commercial bank of Ethiopia by giving due emphasis in Addis Ababa. More specifically this study is aimed to; Investigate the effect of service quality on customer satisfaction in commercial bank of Ethiopia. Examine the roles of service features on customer satisfaction on commercial bank of Ethiopia. Understand the roles of complaint handling system on customers satisfaction in commercial bank of Ethiopia. Investigate the relationship between customer satisfaction and loyalty in commercial bank of Ethiopia. Forward possible recommendations that may help decision makers in organization in attempt to improve service delivery. Literature review Historical Background of the Banking Industry in Ethiopia The commercial Bank of Ethiopia (CBE) was legally established as a Share Company in 1963 to take over the commercial banking activities of the State Bank of Ethiopia, which was founded in 1942 with twin objectives of performing the duties of both commercial and central banking. During the 1974 revolution, CBE got its strength by merging with the privately owned Addis Ababa Bank. Since then, it has been playing a significant role in the development endeavor of the country. The CBE, which is striving to become a worldclass bank, is rendering state-of-the-art and reliable services to its millions of customers, both at home and abroad. The business strategies of the Bank focus on the interest of the public it serves. The state-owned CBE still dominates the market in terms of assets, deposits, capital, and customer base and branch network, despite the growing competition from private banks over the last 15 years. This makes it one of the most reliable and strong commercial banks in the country and the region. Service Quality Without any doubt service quality is very important component in any business related activity. This is especially so to marketer a customer s evaluation of service quality and the resulting level of satisfaction are perceived to affect bottom line measures of business success (Lacobucci et al.; 1994). Service quality has been defined in services marketing literature as an overall assessment of service by the customers. For example, parasuraman et al. (1985) proposed that service quality is a function of the differences between expectation and performance along the quality dimensions. Customers expected service quality is beliefs about a service that services should be provided in line with prespecified standards against which its performance is judged (Zeithaml et al.; 1993) which customer thinks a service provider should offer, rather than what might be offered (Parasuraman et al.; 1988) Perceived service quality is believed to be resulting from comparison between customers prior expectation about the services and their perceptions after actual experience of the services performance (Asubonteng et al.; 1996). From customers point view, services can be defined in terms of process and its outcomes. In other words customers evaluate service quality by examining actual service delivery process and its out came at the end of the day (Parasuraman et al.; 1985). Asiedu (2016) argued that bank service offering is a service rendered to customers to satisfy their needs. He continued that banks ability to know and understand their customer s level of needs and interest is important and beneficial in changing and shaping the firms service portfolio. On the bases of the aforementioned views, Gronroos (1984) offered a service quality model with dimensions of technical quality (what customer gets), functional quality (how customers get the services) and corporate image (how customers perceive the firm and its services). Similarly, Lehtimen and Lehitmen (1991) offered another model with three dimensions of the service quality: physical quality which deals with physical product involved in the services delivery and consumption, interactive quality which refers to the interaction between customers and organization, and finally corporate quality which refers to the corporate image as perceived by the customers. As the support to the above view, service quality can be attributed to the service quality theory which states that customers will judge quality as low if performance does not meet their expectations and quality as high when performance exceeds expectations (Oliver, 1980). Literatures also show that between customers expectations and perceptions always there is a gap. These gaps always happen due to one or all of the following reason. The gap between consumer expectation and management perceptions of their expectation. The gap management perceptions of consumer expectations and the firms service quality specification. The gap between service quality specification and actual service delivery. The gap between actual service delivery and external communication with customers about the service. 208

4 It is marketers effort that helps to close this gap. Closing this gap might require toning down the expectations or heightening the perception of what has actually been received by the customer (parasuraman et al.; 1985) Closing these gap increases service quality. Service quality is determined by the following factors: reliability, responsiveness, assurance, empathy, and tangible. Reliability: the ability to perform promised service dependably and accurately. Responsiveness: the willingness to help customers and to provide prompt service. Assurance: the knowledge and courtesy of employees and their ability to convey trust and confidence. Empathy: the provision of caring, individualized attention to customers. Tangible: the appearance of physical facilities, equipment, personnel and communication materials. In broader terms, quality spells superiority or excellence (Zeithaml, 1996) or as the customers over all impressions of the relative inferiority / superiority of the organization and its services (Bitner, 1994). Given a premise that only customers judge quality, services quality can be also defined as a judgment about services overall excellence or superiority. (Schneider and White, 2004). As they noted that service quality judgments were viewed as global evaluation that was composites of customers experiences with an organization. Customer satisfaction Customer satisfaction is a term most widely used in the business and commerce industry. It is a business term explaining about a measurement of the kind of the products and services provided by company to meet its customer s expectation. It is occupying central position in marketing thought and practice. Many companies today are aiming for total customer satisfaction (TCS). This is because customer satisfaction may be seen as the companies key performance indicators (KPI) and competitive strategies. Customer satisfaction is being global issue that affects all organizations regardless of its size, whether profit or non-profit, local or multinational. It is a major outcomes of marketing activity and serves to link processes culminating in purchase and consumption with post purchase phenomena such as attitude change, repeat purchase intention and brand loyalty. Companies that have more satisfied customer s base also experience high economic returns. (Bolton, 1998) Satisfaction is defined as a judgment that a product or service feature, or the product or service itself provided (or is providing) a pleasurable level of consumption related fulfillment, including levels of under-or- over fulfillment. In less technical terms, satisfaction is the customers evaluation of a product or service in terms of whether that product or service has met their needs and expectations (Olive, 1980) There are two general conceptualizations of satisfaction namely, the transaction specific satisfaction and cumulative satisfaction. Transaction specific transaction resulted from consumers evaluation of particular service encounters. Most of the transaction specific satisfaction is experienced first time users.meanwhile, cumulative satisfaction refers to the customers over all evaluation of the consumption experience to date. Cumulative satisfaction is most important approach to guide service quality (Anderson, 2004). Services Quality in the financial sector Different sources shows that quality management in financial services in getting places as a new phenomenon.80 percent of financial institutions in UK had adopted quality initiative. This phenomenon is attributed to the competitive pressure in the sector emerged from deregulation act that blurred boundaries among firms in the financial industry, increased customer awareness and expectation about service quality, technological innovation, and recessionary pressures that intensified competition and industrial and corporate restructuring resulted in some large scale redundancies, leaving the remaining labor force shocked by the dramatic erosion of secure jobs and careers for life. Customer Satisfaction in the Banking industry Measuring service quality seems to pose difficulties to service providers because of the unique characteristics of the services which include; intangibility, heterogeneity, inseparability, and perishability. Because of these complexities, various measuring models have been developed for measuring perceptions of the services quality (Groonroos, 1990: Parasuramanet al.., 1988). Among the different model is the SERVQUAL developed by Parasuraman,et al.,(1988). SERVQUAL proposes a five dimensional construct of perceived service quality which includes: tangibles, reliability, responsiveness, assurance and empathy-with items reflecting both expectations and perceived performance. As it affects cost, profitability, customer satisfaction, retention, and positive word of mouth service quality has become an important research topic. As mentioned above, there are many research instruments developed to measure the perceived service quality. Among such instruments, the most popular being the SERVQUAL model, well known scale developed by Parasuraman and his followers. Though there are critics, SERVQUAL has been widely acknowledge and applied in various services setting for varieties of industries in the past decade. Examples include: healthcare settings, dental schools, patient clinic, business school placement center, tire store, actual care hospitals, large retails chains, banking, pest control, dry cleaning,and fast food restaurants (Teas,1993). 209

5 Services Features Services features can be defined as the quality or the user requirements related to the matters such frequency, reliability, regularity, suitability, location, safety and convenience(anderson et al., 1976). With banking, the convenience and competitiveness of the provider s offerings and location can be expected to affect customers overall satisfaction and ongoing patronage (Laroche and Taylor, 1988). Competing interest rate provided by banks is another determinant factor in this respect. However, Asiedu (2016) believes that bank service offerings differ from one geographical location to the other. Customer Complaint Handling A major reason why customers switch service providers is unsatisfactory problem resolution. When customers face a problem, they may respond by existing (switching to a new supplier), voicing (attempting to remedy the problem by complaining) or loyalty (staying with the supplier anticipating that things will get better ). Given that customers of banks have relatively high switching costs, it is likely that dissatisfying experience will evoke a passive reaction (non-complaint) or a complaint. Given that the customer complaints, the banks response can lead to customer states ranging from dissatisfaction to satisfaction. In fact, anecdotal evidence suggests that when the service provider accepts responsibility and resolves the problem, the customer become bonded to the organization (Hart et al., 1990) Complaints areutterances of grievances from customers. It is inevitable as there is no perfectly performing organization. Especially for service delivering organization, it is common phenomenon to encounter with complaining customers. Understanding service recovery is particularly important for managers as the unique nature of service (inseparability of production and consumption) makes it impossible to ensure 100 percent error-free service (Fisk et al., 1993).Therefore it is advisable for service giving organization to establish effective system of dealing with customer complaints in addition to striving to avoid it. If complaints are to be handled wisely organizational culture must not be threatening Benefits should accrue to those who complain the organization and potential customers. This can be achieved by encouraging employees to resolve & analyze complaints at the spot. So problems associated with inadequate customer complaints handling system worsen the overall service quality of any service operator There are research evidence which shows the impact of resolving customers problem in desirable manner on customer satisfaction, loyalty and bottom line performance. That is, customers who experience service failure but are ultimately satisfied based on recovery efforts by the firm will be more loyal than those whose problem are not resolved. Firms can translate that loyalty in to profitability. As Zeithaml and Bitner in their 2003 edition had articulated from the work of Technical Assistance Research Program (TARP) those customers who complain and have their problems resolved quickly are much more likely to repurchase than are those whose complaints are not resolved. Those who never complain are least likely to repurchase. Similar results were cited by McDougal and Levesque in 1994 from the research of Fornell and Wernerfelt, (1987). According to their findings, when customers complain, they give the firm a chance to rectify the problem and interestingly if the firm resolves successfully, it increases loyalty and profits. Thus customer complaint handlings can have an influence on customer satisfaction and retention. Asiedu (2016) opined that customer retention ability is the ability of a bank to retain its customers based on the assessment of product or service quality. Therefore an effective service recovery strategy has a number of potential impacts. It can increase customer satisfaction and loyalty and generate positive word of mouth as noted earlier. It also provides information that can be used to improve services as a part of continues improvement effort. It increases companies likelihood of doing things right the first time. Effective service recovery improves financial performance of the organizations too. In the marketing literature it is well documented that customer acquisition cost is much greater than that of customers retention cost (Clow and Kurtz 2003). Therefore, firms can save its customer acquisition cost by employing effective customer complaint handling system that retains them for longer period time with organization in turn. As Abosaig et al., (2011) referenced from different work on importance of effective customer complaint handling : a positive approach to dealing with customer complaints should help to maintain in customer relationships and generate positive communication about the company. Importantly repeat purchases by established customers usually require up to 90 percent less marketing expenditure than do purchases by first time buyers. While complaining customer show different behavior. Their complaining behavior encompasses one of the following: passive, voicers, irate, and activist. Passive complainers take little action as they doubt the effects of complaining. Voicers express their complaint to the organization but less likely to third parties. So they are considered as best friends to the organization. Irate express their complaint aggressively and engage negative word of mouth. Activist complainers express their complaint on all possible dimensions and sometimes they can be terrorists against organizational performances. (Klow and Kurtz, 2003). In addition to its importance to organizational performance, customer complaint handling demands moral obligation of the service providers. This is because customers expect justice and fair treatment in handling their complaints. As referenced by Zeithaml and Bitner (2003) from the work of service recovery experts named, Steven Brown and Steven tax, customers are looking for three types of justice for their complaints: outcome fairness that shows customers expectation with regard to outcome of their complaints which may include actual monetary compensation, an apology, future free services, reduced charges, repairs and /or replacements. 210

6 Procedural fairness is about customer expectation regarding fairness policies, rules and timeliness of the complaint process. Finally interaction fairness which is concerned with customers expectation to be treated politely with care and honesty. Similarly, McCullough et al., (2000) examined recovery evaluation from the perspective of justice. They examined a number of previous works like (Good win and Ross 1992, Hocutt, chakraborty and Mowen, 1997: Tax Brown and chandrashekaran1998). They tried to add to their work by exploring the role played by distributive and interactive justice. Distributive justice shows customers comparison of costs incurred with their benefits gained whereas interactive justice concerns the fairness of the recovery process itself or the interactional aspects of the encounter. Customer loyalty Services rendered by the company create a sort of behavioral related intention to wards service or the company. These intentions are known as customer loyalty. From the print view of Asiedu (2016) banks ability to retain its customer s shows how satisfied their customers and brand loyalties are. In other words, customer loyalty expresses an intended behavior related to the service or the company. Researchers have identified different variables that measures real customer loyalty. The most commonly used variable to measure customer loyalty has been their intention to repurchase. But as it is mentioned earlier customers may show repurchase intention not because of their real loyalty but lack of another alternative may force them to do so. Many researchers have used service recommendation to other customer as a proxy for customer loyalty. Besides recommendation other items which have been used extensively for customer loyalty measurements are consideration of the company as the first choice service provider and continuing to do business with the same company (Zeithaml et al., 1996). Research Hypotheses Improving customer satisfaction, and retention rates, can come from a variety of activities available to the firm. The existing evidence suggests that major gains in customer satisfaction are likely to come from improvements in: Service quality Service features; and Handling customer complaints effectively. Therefore, hypotheses to this study were articulated based on aforementioned three dimensions. In line with the reviewed literature, the following hypotheses developed to this study. H1: There is positive relationship between services quality and customer satisfaction. H2: By enhancing the service features, customer satisfaction will be improved. H3: Effective customer complaint handling will enhance customer satisfaction. H4: Customer satisfaction and behavioral intension are positively related Research Model Services quality dimensions Tangibility Responsiveness Knowledge Reliability Services Quality Accessibility Source: Literature 211

7 Service Quality H1 Service Features H2 Customer H4 Satisfactio n Customer Loyalty Customer Compliant handling system H3 Source : Literature Review Methodology and Research Design The type of research employed here was descriptive in nature. This is because the intention of this study is to describe the present satisfaction level of the customers with regard to factors like services quality, services features, and complaints handling system of commercial bank of Ethiopia (CBE) by giving special emphases in Addis Ababa. The target population that involved in this study were general public who are at the legal age to hold a savings, and or current account and use any banking services in commercial bank of the Ethiopia in Addis Ababa. Research Instruments Both self-administered and schedule type of questionnaire were used as a data collection instrument from customers. Questionnaire were taken from two previous researches by Olorunniwo and K.Hsu in 2006 and Hossain and Leo in In this research those two questionnaires were combined and its applicability to commercial bank of the Ethiopia were checked by preliminary survey. Generally questionnaire were divided in to five parts. The first part of the questionnaire deals with the demographic characteristics of the respondents (age, gender, educational qualification, marital status, and monthly income etc). Through this questionnaire, information that reveals the effect of demographic factors on factors like: service quality, and service features, customer complaint handling and loyalty were examined. Second part of the questionnaire was designed to rate customers perception of the service quality based on SERVIQUAL dimensions modified for banking sector (Schemenner, 2004). Third part of the questionnaires was developed to collect data that reveals customers satisfaction level towards service quality of the organization. Fourth part of the questionnaires were designed to collect information from customers that reveal their satisfaction level with regard to services features of commercial bank of Ethiopia. With the final part of the questionnaire information that shows customers perception of complaint handling system of the organization and their behavioral intension with regard to aforementioned factors were examined. Except the first part, the remaining four parts of the questionnaire were five point likert scale type ranging from 1 strongly disagree to 5 strongly agree. Sampling Design and Techniques There are 70 branches of commercial bank of Ethiopia in Addis Ababa. As services quality and other features differ from branch to branch depending on managerial efficiency and other factors, sample branches were taken for this study. To do so, seven branches 212

8 were selected through simple random probability sampling techniques for this study. These branches are: Addis Ababa, Finfine, Teklehymanot, Sengaterra, Megenagna, Kotebe and Arati Kilo Selassie branches. 30 customers were selected from each branch to fill questionnaires on the bases of convenience sampling techniques. Generally questionnaires were distributed to 210 sample customers on convince none probability sampling technique bases. These amounts of sample were selected based on affordability approach by taking time shortage and the cost of data collection into consideration. Limitations and Implications for Further Research The following limitations might had affected the finding of this study. Since sample size was very limited, it was not large enough to represent entire users of the service. In addition to this, this study did not examine users satisfaction with regard to the automatic teller machine (ATM) service of commercial bank in the Ethiopia as it involves technology related dimension of measurements it requires separate treatment. Discussion and Results Demographic Characteristics of Respondents gender of respondents Total Variables Female age of respondents >36 Total Male (Source: Survey, 2017) Asit is depicted in the table 4.1, among 178(100%) respondents, 76(42.6%) are females and 102(57.4%) are males. Among female respondents 15 (19.7%) lies in the age range of 18-25, 31 (40.7%) of them lies in the age interval of 26-30, 19(25%) of them lies in the age range of and the remaining 11 (14.5%) lies in the age range of greater than 36. Among male respondents 25(24.5%) found in the age interval of 18-25, 38(37.2%) of them lies in the age range of 26-31, 32(31.3%) of them fall in the age range of and the remaining of (7%) are found in the age range of greater than 36. Measures Items Frequency Percentage Educational Below high school Level High school completed College diploma Bachelors Masters PhD Monthly < income > Service type Checking account Saving account Loan Mortgage Duration the bank with Frequency of the monthly visit Others Less than 6 month Between 6 and 12 month More than one up to 3 yrs More than three years Up to s times More than 5 up to 10 times More than 10 up to 20 time More than 2o times (Source: Survey.2017) As depicted in the table 4.2, educational level really gave a picture of varied results. Largest number of 61(34.3%) of the respondents were college diploma holders followed by 57(32%) bachelors and only 4(2.2%) were PhD holders. Income level of 73(41%) of the 213

9 respondents fall in the income range of Ethiopian birr followed by 49(27.5%) in the income range of and unfortunately 1(0.6%) of the respondents got more than 3000 birr. Most of the respondents 75(42.1%) are using saving accounts followed by 65(36.5%) who are using checking accounts and only 2(1.12%) of the respondents are using mortgage service from commercial bank of the Ethiopia. Duration of respondents as customer of the bank is concerned, largest number of the respondents 60(33.7%) has been using services of the bank from more than one up to three years followed by 45(25.2%) of the respondents who has been using banking service over three years and only 30(16.8%) of the respondents has been counted less than six as a customer of the commercial bank of the Ethiopia. Frequency of the visits of 72(40.4%) of the respondents was up to 5 times per month followed by 69(38.8%) who have visit mare than five up to 10 times per month and only 9(5.1%) of the respondents visit more than 20 times per month. Summary of descriptive statistics for variables Constructs Mean Std. Deviation Services quality Services features Complaint handling Customer satisfaction Future intension (source,survey,2017) The mean values of the services quality is It was calculated from mean values of SERVQUAL dimensions. It clearly portrays that almost half of the respondents disagreed by the questions relating to the services quality. Some observations is found for service features with mean value showing that more than half of the respondents agreed with questions relating to the service features. The mean value of has been observed for complaint handling systems of the organization revealing that most number of the customer agreed with the questions relating with complaint handling system of the organization. The mean value observed for questions relating to the future intension is different (2.760) portraying that almost half of the respondents disagreed with questions relating to the customers feature intension with the organization. The result of this study show medium satisfaction (mean=2.760). From this it is possible to conclude that customers are moderately satisfied with performance of commercial bank of Ethiopia. Hypothesis Test To test the hypothesis, correlation and regression analysis were applied. Before applying statistical test, reliability of the data was checked. It was done by calculating Cranach's alpha value for all corresponding variables. The result was depicted on the following table. Constructs Corrected Item-Total Correlation Squared Multiple Correlation Cranach's Alpha value Tangibility Responsiveness Knowledge Reliability Accessibility Satisfaction Service features Complaint Loyalty (source,survey,2017) As it shown in the table 4.14, Cranach's alpha value was calculated for all the variables involved. All values are greater than 0.7. Given the statistical rule that Cranach's alpha value greater than 70% portrays reliable data, all the above results are acceptable (Schmenner, et al., 2004) Correlation Analysis As it is explained in the objective part of this study, the aim of the paper is to examine major determinants of customer satisfaction and relationship between customer satisfaction and loyalty. Services quality, services features and customer complaint handling system is 214

10 found as major determinants of the customer satisfaction. The following table shows correlation between the aforementioned factors and customer satisfaction. Constructs Service quality Service feature Complaint handling Customer satisfaction future Sig intension Service quality 0 Service feature Complaint handling Customer satisfaction Future intension.797 **.788 ** **.766 **.959 ** ** 1 **. Correlation is significant at the 0.01 level (2-tailed). Source: Survey 2017 As it is explained earlier, correlation analysis determines the strength of the relationship as well as the extent of association between variables. As shown on the above table statistically significant relationship has been found among variables at 0.01 levels. Results of correlation analysis show that future intension is found significantly correlated with customer satisfaction (0.967) portraying that customers satisfaction brings about long lasting bond with the organization. Correlation value between customer satisfaction and customer complaint handling is which depicts that if customer complaints are handled effectively, customer satisfaction can be enhanced. Previous work has shown that customer who encounter with service failure and recovered effectively will be more loyal than someone who did not encounter with such mistakes (recovery paradox). Statistically high significance detected by this study supports the above view. Correlation value between service quality and customer satisfaction is found to be portraying that organization can enhance customer satisfaction through quality service delivery. Correlation value between services features and customer satisfaction shows less value relatively but is statistically significant (0.766). The implication is that if customers are provided lofty and valuable service feature then customer satisfaction can be enhanced. The relationship between customer satisfaction and customer loyalty **. Correlation is significant at the 0.01 level (2-tailed). The results of the correlation analysis supported the hypothesis H1.H2,H3, and H4 proved that there is a positive relationship between Service quality and customer satisfaction, Service features and customer satisfaction, Complaint handling system and customer satisfaction, and Customer satisfaction and feature intension. 215

11 Pearson correlation index test results between services quality, services features, dealing with customer complaints and customer satisfaction and as well as customer satisfaction and future intention. Hypothesis H1: There is positive relationship between services And customer satisfaction. H2: By enhancing the service features, customer Correlation index P -value Test result.955 ** 0 Supported.766 ** 0 Supported Satisfaction will be improved. H3: Effective customer complaint handling will.959 ** 0 Supported Enhance customer satisfaction. H4: Customer satisfaction and behavioral intension Is positively related..967 ** 0 Supported Source: survey,

12 Regression Analysis Model summary Dependent variable Independent variable R 2 F VIF Beta t- stat Sign Customer satisfaction Services quality Services feature Customer complaint handling system 1: : : (Source: survey, 2017) For the second model R2 = were obtained, and it can be said that 94 percent of the dependent variable changes is explained by the model. In other words, very high percentage of the dependent variable changes is identified by the model. To understand the linearity of the relationships between the variables pair, singe factor variance analysis (ANOVA) is used. The test statistics F= and also zero meaningfulness level. Since the meaningfulness level is less than error level, there is a meaning full linear relationship between dependent variables and independent variable. VIF value is calculated to investigate multi-co linearity problems in the model due to variance inflating factors and it is in the acceptable standards given statistical rule that VIF value between zero and four is acceptable. Beta values are calculated to examine the individual contributions of the independent variable towards dependent variable. It was calculated by relating independent variable jointly with dependent variable. The Beta value between services quality and customer satisfaction is 0.995, followed by the dealing with customer complaints (0.959) and services feature (0.766). From the model one can conclude that services quality has highest contribution towards customer satisfaction. T-statistics is calculated to know the significance level of the independent variables to be explained individually. T-value in this model was calculated by taking each independent variable separately with dependent variable. As model clearly shows, services features can be explained more significantly than the others. T-values in all cases support the hypotheses of this study according to statistical rule which says, if t-value is greater than two then hypothesis can be accepted. Regression model for customer satisfaction and loyalty Dependent variable Independent variable R 2 F VIF Beta t- stat Sign Future intension Customer satisfaction E Source: Survey,2015 As shown on the table R 2 = was obtained, in the third model and it can considered that 93 percent of the dependent variable changes are identified by the model. As a result customer satisfaction mediates the relationship between factors that affect customer satisfaction and loyalty. The test statistic F = 2.549E3 was obtained through single factor variance analysis (ANOVA). The result show meaningful linear relationship between customer satisfaction and loyalty. The highest value of F-static in the model indicates strong relationship between satisfaction and loyalty. Beta figure in the model indicate statistically significant contributions of the customer satisfaction and customer loyalty. The highest t-value (50.487) in the model indicates that customer satisfaction is significant to be explained lonely. Finding and Conclusion Services quality is one of the determinant factors of customer satisfaction. Delivering outstanding services to the customer determines long run performance of the organization. Customer service can be enhanced through lofty and valuable service features. There is 217

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